Russia’s Central Bank on Bitcoin and Blockchain: We Don’t Want to be Left Behind

According to Alla Bakina, the head of the Central Bank’s department of national payments system, the regulator is working on applying financial technologies to create a national cryptocurrency and regulate other cryptocurrencies and exchange platforms.

“There are several directions the Central Bank is taking now. One may consider cryptocurrency a national currency, i.e. something issued under supervision and with full understanding of the Central Bank. We haven’t come up with the name, but it’s about applying financial technologies for issuance processes. For now, it’s on the stage of studying and testing,” she said.

Speaking about the usefulness of a national cryptocurrency, the official mentioned the speed, transparency and manageability associated with the new technology.

“Secondly, it’s currency issued by other issuers, like Bitcoin, Litecoin, and so on. In this regard, we’re thinking of how to amend the regulatory framework, i.e. introduce a definition of cryptocurrency for those cases, as well as regulation of operations at exchange platforms, the issues of identification, and the money laundering and terrorism financing problems associated therewith,” she added.

Meanwhile, Dmitri Skobelkin, deputy chairman of the Central Bank of Russia, believes that legalizing cryptocurrencies would reduce the risk of their illicit use.

“Currently cryptocurrencies are often used by criminals and to fund terrorism as the operations feature nearly complete anonymity of payments,” he said.

Mr. Skobelkin also said that if Russia fails to recognize cryptocurrency that circulates in all other countries, this would only make the country’s position more vulnerable.

Still, Elvira Nabiullina, the head of the Central Bank, stressed that the regulator has to thoroughly study the principles underlying cryptocurrencies and only then introduce a regulatory framework. It would heavily depend on whether cryptocurrencies are considered a digital asset or a currency.

“As for cryptocurrencies, financial regulators in most countries are still studying the phenomenon. We have to understand that when we speak of a national cryptocurrency, it has to be studied first if it’s not a mere digital asset but a national currency,” she said at the joint session of financial markets, budget and economic policy committees at Russian parliament.

She also noted that Russia needs to promote digital economy.

“We don’t want to suck wind. We’ve created a Fintech association together with the finance’s key players who are already testing new technologies. Prior to regulating anything we have to realize how it works, what are the associated risks, and build the regulatory framework accordingly. This applies to blockchain technology as well, though it works not just with finance,” the Central Bank’s head stated.

Last week, the deputy chairwoman of Russia’s Central Bank Olga Skorobogatova said the regulator was willing to revisit its plans of creating a national cryptocurrency, and noted that, if blockchain revolution is inevitable, one should do their best in order to be spearhead those efforts.